Posted inChina

Income Partners debuts PFM product in China

The firm is also targeting the retail investor base in the mainland via the MRF scheme.

Income Partners’s Shanghai-based wholly foreign-owned enterprise (WFOE) has received approval on Tuesday to launch a private fund management (PFM) product in the mainland, according to records from the Asset Management Association of China (AMAC).

The Income Partners Investment Bond Select No 1 Private Securities Investment Fund will be the firm’s first PFM fund. This comes after the asset manager was granted a PFM license in March this year.

A PFM licence enables foreign entities to develop and sell onshore funds investing in the domestic market to qualified investors in the mainland, which include institutional and high net worth individuals.

The firm established its WFOE in August 2018, which is a prerequisite for onshore fund distribution. Initially, the firm expected to launch its first onshore product last year, Emil Nguy, chairman, CEO and CIO for Hong, told FSA previously.

At the time, Nguy said that China will play a big part in his company’s fixed income strategy in the medium term.

“In China, if you do one thing well, it is good enough. We [will] continue to focus on one asset class,” he said.

Nguy added that the firm’s Shanghai WFOE is not purely an onshore foothold to service domestic investors but also for clients from overseas.

In total, around 30 foreign asset managers have been granted PFM licences, with around 100 PFM products having been approved by the AMAC, its records show.


Separately, the firm submitted an application with China Securities Regulatory Commission (CSRC) in May this year to sell its Managed Volatility High Yield Bond Fund to mainland investors via the Hong Kong-China Mutual Recognition of Funds (MRF) scheme.

Once approved, it will be the firm’s first MRF fund. CSRC record shows that it is still waiting for regulatory approval.

The MRF between mainland China and Hong Kong is a scheme jointly launched by the China Securities Regulatory Commission (CSRC) and Hong Kong’s Securities and Futures Commission (SFC) in July 2015. Under the scheme, eligible mainland and Hong Kong funds can be distributed in each other’s markets.

“This is a great opportunity to diversify the investor base [to include onshore retail and professional investors]. The onshore markets are also a key market for us given the size of the market, and over time, will rival the US in terms of its size and depth,” Poon Suen Son, Hong Kong-based chief operating officer and general counsel at Income Partners told FSA previously.

The Managed Volatility High Yield Bond Fund was incepted in 2011 and had RMB 951m ($145m) in assets as of the end of October, according to FE Fundinfo.

Managed by Raymond Gui and James Hu, the fund is denominated in renminbi and invests in high yield bonds, with a strong tilt toward real estate (57.0%) and China (54.3%), the fund’s factsheet noted.

The Managed Volatility High Yield Bond Fund vs category average

Source: FE Fundinfo. Three-year cumulative returns in US dollars. Note: the fund does not have a benchmark.

Part of the Mark Allen Group.